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Restoration Rewind Delta Development Group Monthly Newsletter

May 2014


We have concluded another successful franchise training, and the Western Colorado office is ready to open shop. OK, maybe not quite yet, but they have been jam packed full of all the Delta Disaster Services information possible, and they are on the downhill to their grand opening, June 4, 2014.

Our two week training is an intense, in-depth program, taking our new franchise through the complete ins and outs of the restoration industry and most importantly the inner workings of Delta Disaster Services. We introduce them to the mitigation and construction cycle, the equipment they will be using, the software that will manage their jobs, the paperwork needed and much much more. The program is also split between classroom time and field time, giving the trainees a hands-on experience to the day-today.


We were also lucky to be joined by employees of many of our other offices. Our owners have all seen the value behind our initial training program and are dedicated to making sure that their new employees have the same training that they received. We had representatives from the Salt Lake South, Southern Utah and Northern Colorado offices all join us throughout the two weeks. In past training sessions we have only had the initial employees from the office we were opening, but with the addition of the employees from other offices, we were able to make the training sessions that much more effective. Being able to share on-the-job stories and best practices brings another dynamic to the program that we can’t create on our own. We hope that our offices will continue to send their new employees to our quarterly training offerings, helping to build the Delta Disaster Services network tighter and tighter. Throughout the two weeks we touch on every aspect of the business. We bring in guest speakers to talk about various aspects of the industry. Speakers like Mike Schaan, who sheds some light on mitigation from a practical approach and homeowner’s insurance expert Bob Gentry who covers the HO-3 insurance policy in-depth with our group.


Built into the program schedule is also a luncheon in which our vendors our invited to meet with the newest business owners and begin their business relationship face-toface. As with this session, the new owners are able to walk away from that lunch having had conversations with the companies that will provide their printed materials, building and vehicle signage, uniforms, marketing materials, etc. We greatly value our vendors and the relationships we have built with them. We thank them for taking the time out of their days to visit with our group and demonstrate their commitment to the relationship. This session’s luncheon was sponsored by CRDN, and a special thanks goes out to them for their continuing support of Delta Disaster Services. Also incorporated into our program is a visit to the Denver Interlink office. There the franchise is guided through their entire equipment package by the expert team at Interlink. They are able to take things apart and put them back together, to move them around and ask as many questions as they can. The guys at Interlink also create a small flood scenario for the application of some of the equipment. They flood a small room and the trainees are able to actually use the equipment to extract water, pull up carpet and pad and being the drying process. Overall the two weeks was an incredible success. While overloaded and tired, the group still walked away excited and ready to meet the restoration world in Grand Junction head on. We hope to see everyone at their grand opening June 4, 2014.


Claims Adjusting: The Past, Present and Future By CHRISTOPHER TIDBALL April 16, 2014

As I was sitting through a fascinating discussion being facilitated by “Practical Futurist” Michael Rogers, I couldn’t help but reflect on how things have changed when it comes to insurance claims. When I began my claims career in 1989, the first George Bush was president and Pontiac still made cars. I know, because my first company car was a Sunbird. In fact, many adjusters had company cars because our job was done in the streets, miles from the types of service centers that handle the majority of claims today. The tools of the trade were simple; a Polaroid camera, a Dictaphone, a calculator and estimating sheets. We had no computers or cell phones. If you wanted to make a call, you dropped a quarter into a pay phone and hoped someone on the other end would pick up. All of our “Adjuster Notes” were handwritten. Changing reserves meant filling out a form in triplicate and waiting a few days for processing. There were no iPhones, iPads or iAnythings for that matter. I think it was the early 90’s when I got my first mobile phone, which was roughly the size of a cooler you’d take to the beach on a warm summer day—and it weighed just as much.

But despite this lack of technology, we somehow managed to adjust claims. In many respects, the outcomes were often better than today. The learning curve was quick, especially on the streets of South-Central L.A., which was my first territory. Fraud was


rampant, gangs were prevalent and there was no shortage of corrupt body shops, attorneys and medical clinics. In the early 90’s, it was estimated by the Los Angeles District Attorney that roughly half of all claims in L.A. County were fraudulent. As the years passed, technology began to evolve. In the early 1990’s, the first desktops made their way onto adjusters desks. Netscape was founded and became the dominant web browser. The cellphones became smaller and the workloads became larger. Small, localized claims offices became mega claim centers. Adjusting as a skilled trade became more of a processing role. As the 90’s faded into the millennium, the first HDTV’s found their way to our homes, laptops became the tool of choice while flip phones became Blackberry’s. While these were cool gadgets for the time, they also rendered users accessible 24/7. Work days became longer, vacations shorter and usually involved addressing those critical e-mails that the boss found necessary to send to your villa on the French Riviera. One recurring question that I often field is whether claims organizations are effectively leveraging all of these changes. Certainly we have gotten to a point where we can do more with less, but quite often we aren’t doing everything within our power to maximize outcomes. From a business and product side, there are some really impressive forward thinking steps that have happened. Apps to report losses, calculate liability and estimate damages have given the customer a new degree of empowerment. This is only going to gather momentum and will ultimately creep into the world of claims adjusting. Despite all of the gains, many claims organizations remain hamstrung by inconsistent handling and outcomes. So why is it that with all of the technology at our fingertips, our investigative abilities are often lagging behind where they were a generation ago? Herein lies the quandary of the present day. Perhaps understanding where we are headed directionally will provide us with some key answers. So let’s take a minute to think about what things will look like 10 years from now, in the year 2024.


To bring things into perspective, let’s reflect on where we were 10 years ago to see how far things have advanced. Roughly this many years ago we saw the iPhone introduced, Facebook became a household name and 32-inch plasma televisions cost several thousand dollars. Today, Facebook has over a billion users, more than 6 billion hours of YouTube video is watched each month, more people have iPhones than do not and 32-inch plasma televisions cost $189 dollars at your local Wal-Mart. As fast as technology is evolving, many believe that we have reached critical mass with little room to expand. I would beg to differ. In 10 years we will have self-driving cars, and yes, those cars will still run into one another. This will create a brand new field of litigation, as determining cause will be far more complex than pointing a finger at a negligent driver like we do today. For those of us who grew up watching the Jetsons, flying cars may very well be part of our vernacular, too! Boston based Terrafugia has recently announced that they have started working on the TF-X, a four seat, plug in hybrid electric car that can do vertical take offs and landings. Filing claims will be as simple as an app on a future generation iPhone. There will be no keyboard as those phones will be way too small for that functionality. Rather, all instructions will be vocalized, or perhaps even parsed from our thoughts. We may don a pair of Google glasses and share the accident scene virtually with First Notice of Loss. There will be an app to guide insureds through the estimating process and funds will be electronically placed into accounts. Will there be fraud? Of course. Where there is insurance, fraudsters will always lurk. It is far too lucrative an industry to go away, especially when one considers that there is virtually no risk of punishment for this white collar crime. But, beware! Adjusters and insured’s will have new tools too. Chances are that if someone steals from you, the chip in what was stolen will instantly identify its location. In fact, you will have a virtual inventory of every possession and know its location at all times. Homes will be equipped with not only remote capabilities, but will often have 24/7 video surveillance, theft and fire deterrents.


As far as injury claims, there will be vastly more shared data than is available today. As the government gets more involved in health care, we will see massive federal repositories that capture data on not only medical data, but, as Orwellian as it sounds, also substantial lifestyle data that will provide predictors of longevity and likelihood of future treatment. The prior claims that we struggle to identify today will be available via a federal repository of data. Of course, there will be a significant increase in litigation as it pertains to privacy and private health information. Think of HIPAA on steroids. There will be attempts to fully automate the claims process, which will see some success in the world of fast track claims, but will struggle in the world of complex claims. New technology will share with us the probability of injuries based upon accident scenario and g-forces, yet we will struggle as claimants will always be unique. Predictive modeling will evolve to a platform by which risk and link analysis begins with underwriting and continues throughout the entire claims process. A key opportunity will be available to those who can provide key skills to new adjusters. As the older generation, who used to be the feet on the street, retire, they will continue to be replaced with more claims processing roles. Ultimately this will have a detrimental impact on leadership who will likely have keep business acumen, but not the technical knowledge of yesteryear. Productivity will continue to rise, and insurers who want to maintain a competitive advantage will leverage proven technologies, such as future generations of ClaimIQ, Decision Point, Smart Advisor and applications not yet even created! It is amazing to think of where we will be, especially given where we have come from. While I am getting older, it really doesn’t seem like that long ago when polaroid’s, pocket rods and Dictaphones were our tools of the trade. It is exciting to see where things are going, but one thing that will not change is the need for claims organizations to focus on the fundamentals of basic claims execution. Even with the most advanced and robust technology in the world, there will still be basic issues that need addressed, such as comparative negligence, subrogation, salvage, medical bill review, estimatics and injury evaluations.


In Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary, a key characteristic of successful claims organizations is having an insatiable curiosity. This is something that can’t be created in the virtual world and can’t be developed as a software application. This is the human element of claims, one that was alive 25 years ago and will be alive 25 years from now. It is what makes us a unique industry. Whether it is an adjuster trying to figure out how that house burned down or an executive trying to figure out how to improve adjuster negotiation skills, our success comes from asking questions. The more we ask, the more successful we will become. So I ask you, where will we be in the year 2024 as both individuals and as an industry. As always, I love getting feedback so please e-mail your responses or start a discussion on the LinkedIn Re-Adjusted: Taking your claims organization from ordinary to extraordinary group page. Christopher Tidball is a claims consultant and the author of Re:Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary. His career has spanned more than 20 years for multiple top 10 P&C carriers in roles ranging from claims adjusting and management to quality assurance and leadership


Got Flames?

Have you had your first fire as a franchise yet? As we know, water is the majority of the referrals that we receive as franchises. However, the elusive fire is something that is not only profitable, but opens up a whole other revenue source. It's not highly publicized but when a franchisee contracts for their first fire job, we send them out a small point of recognition. They're valve stem covers with flames, we think they're pretty cool. If you haven't received yours yet, it's because you have not been recognized for receiving your first fire loss! Make sure to let us know when you do or did and we will get you your flames!


Lowe’s to pay $500,000 civil penalty, the largest ever for violations of the lead RRP Rule, under a settlement agreement with EPA Lowe’s Reach Settlement on Lead Dust from Renovations Lowe’s Home Centers, one of the nation’s largest home improvement retailers, has agreed to implement a compliance program at more than 1,700 stores to ensure that the contractors it hires to perform work minimize lead dust from home renovation activities. The settlement is part of the Environmental Protection Agency’s ongoing effort to enforce the federal Lead Renovation, Repair, and Painting (RRP) Rule. The company will also pay a $500,000 civil penalty, which is the largest ever for violations of the RRP Rule. The settlement stems from violations, discovered by EPA inspectors, of the RRP Rule’s recordkeeping and work practice standards at private homes that had been renovated by Lowe’s contractors. “Today’s settlement sends a clear message to all contractors and the firms they hire: Get lead certified and comply with the law to protect children from exposure to dangerous lead dust,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Lowe's is taking responsibility for the actions of the firms it hires, and EPA expects other contractors to do the same.” The settlement “requires Lowe’s to institute a robust, nationwide program at over 1,700 of its stores to ensure that the contractors it hires to perform renovation projects, like window and door installation, are properly certified and adhere to practices that help prevent lead contamination in customers’ homes,” said Robert Dreher, Assistant Attorney General for the Justice Department’s Environmental Division.


The government complaint alleged that Lowe’s failed to provide documentation showing that specific contractors had been certified by EPA, had been properly trained, had used lead-safe work practices, or had correctly used EPA-approved lead test kits at renovation sites. Additionally, EPA’s investigation found that Lowe’s had also failed to ensure that work areas had been properly contained and cleaned during renovations at three homes. EPA’s investigation was prompted by tips and complaints submitted by the public.

Benchmarks and Averages Why Track the numbers? There are lots of reasons to track the numbers, number one being the sustainability of your business. The Following are the benchmarks and averages we have provided you over the past few months. Always look for ways to improve the numbers!

SALES AND PRODUCTION MINIMUM Sales Year One: MINIMUM Sales Year Two: MINIMUM Sales Year Three: MINIMUM Sales Year Four: MINIMUM Sales Year Five:

$450,000 $850,000 $1,000,000 $1,225,000 $1,350,000

Mix of Business (Industry Average)

MITIGATION CONSTRUCTION

30% 70%

Profit Margins (Industry Average)

70% 40%


RECEIVABLES – DAYS OUTSTANDING (DSO) Industry Average – 45 Days Delta Disaster Services of Denver 2014 Average – 26.6 Days Your target – 35 Days or sooner OVERHEAD This number will vary based on what you are charging to the “Top Line” or job costing. If everything is being job costed properly, assume your overhead will be in the 20-24% range. It most likely will be higher your first year in business and decline as the business becomes more profitable and as work increases which allows you to job cost all appropriate costs. MARKETING AND SALES CALLS 100 Sales Calls per week Agents, Plumbers, Adjusters, Fire Departments, Property Managers

More than 66% of respondents identified a lack of communication about the claims

process as one of the biggest obstacles to better serving the needs of customers


8 Conversational Habits That Kill Credibility By Geoffrey James, Copyright Inc.com Dressing for success may create a good impression, but people judge your intelligence and credibility based upon what comes out of your mouth. Here are eight verbal habits that immediately mark you as somebody who’s either foolish or shifty: 1. Jargon Jargon (aka “biz-blab”) consists of hijacking normal words and using them in odd ways to make them sound “businessy.” Example: “We’re reaching out to our customer advocates to leverage a dialogue on….” While others who speak fluent biz-blab might not take notice or care, everyone else cringes and rolls their eyes. Fix: Use words as they’re defined in the dictionary. Example: “We’re contacting our customers to discuss….” That way, you’ll sound more like a professional and less like a cartoon businessperson. 2. Clichés These are those metaphors that have been used so frequently that all the juice has been leeched from them. Examples: “out-of-the-box thinking” or “hitting one out of the ballpark.” Clichés aren’t just unoriginal but also reveal a lack of respect for the listener. If you really cared, you wouldn’t trot out these creaky phrases. Fix: Avoid metaphors completely or use original ones. If that’s too hard, tweak the wording of clichés to make them less cliché-ish. Example: my use of “leeched” rather than “squeezed” in the paragraph above. Worst case, adding “proverbial” can refresh a cliché with a pinch of irony. Example: “out of the proverbial ballpark.” 3. Prolixity Using big, impressive sounding words rather than smaller, common ones can leave listeners with the impression that you’re pompous and pretentious. Examples: “assess strategic options and tactical approaches” (i.e. “plan”) or “implement communications infrastructure” (i.e. “add wireless”). Fancy-schmancy wording adds bulk and extracts clarity.


Fix: The core problem here is the need to feel as if your business and your activities are more important and impressive than they really are. The fix, therefore, is a big dose of humility. Business is neither rocket science nor brain surgery–it is, in fact, a place where plain talk is both valued and appreciated. 4. Hiccups This is when, uh…you insert a word or sound into a sentence when, like…you’re pausing to think, um…exactly what you’re going to say. I once heard a guy say “um” over 100 times in a five minute presentation. By the end, the audience was practically tearing their collective hair out in annoyance. Fix: This one is easy. Simply eliminate the hiccup word and pause instead. When you simply pause in silence, rather than trying to fill the thinking space with the hiccup, you end up sounding wise and like you’re choosing your words carefully. You may need to record yourself a few times to break the habit, though. 5. Upticks An uptick turns a statement into a question. The uptick can be a raise of pitch at the end of the sentence or, worse, can be signaled by an actual phrase, like “[statement], you know?” or “[statement], eh?” Upticks communicate that you’re not confident of your ability to communicate clearly, hence the constant checking. Fix: If you’re unsure whether the other person is following your statements, ask a specific question such as “Are you following me?” or “Does that make sense so far?” In other words, either ask questions or make statements. Don’t try to fudge them together, OK? 6. Weasel Words These are attempts to fool employees by disguising ugly facts as bloodless abstractions. Examples: using “development opportunity” when you mean “drudgery,” or saying “rightsizing” when you mean “firing people.” Weasel words mark you as a coward who’s afraid to face the social stigma of making an unpopular decision. Fix: Show some courage! You’ll get more respect and credibility in the long run for telling unpleasant truths than for pleasant-sounding lies. Because–here’s the thing– everyone knows anyway and you’re not fooling anybody. 7. Fake Apologies This is what people do when they feel socially obligated to apologize but they aren’t really sorry. Common example: “I’m sorry if anybody was offended.” Such “apologies” add the insult of blaming the other person for being offended to the injury of the original offense.


Fix: Real apologies are like: “I apologize for doing Y. I wasn’t thinking clearly and I won’t do Y again.” They come from the heart. If you can’t apologize from the heart, don’t bother, because you’re not really apologizing. 8. Spray and Pray This consists of blurting out a stream of facts or observations before finding out which ones (if any) might actually be of interest to the listener. Probably 95 percent of all presentations fall into this category but when it happens in conversation it makes you look like a blathering fool. Fix: Always think “conversation” rather than “sales pitch.” Ask questions, respond to comments, figure out what’s needed, and only then trot out facts and observations that are immediately relevant.


And we will leave you with this:

The trick is in what one emphasizes. We either make ourselves miserable, or we make ourselves strong. The amount of work is the same. – Carlos Castaneda


Restoration Rewind May 2014